Before you retire, verify that your savings, Social Security, and other income sources can cover your expenses for 25-30+ years — including the healthcare costs that surprise most retirees. Retiring without a plan is the most expensive mistake you can make.
Master Retirement Readiness Checklist
| # | Task | Priority |
|---|---|---|
| 1 | Calculate retirement income from all sources | 🔴 Critical |
| 2 | Estimate realistic annual expenses | 🔴 Critical |
| 3 | Plan healthcare coverage (especially before 65) | 🔴 Critical |
| 4 | Decide Social Security claiming age | 🔴 Critical |
| 5 | Create a tax-efficient withdrawal strategy | 🔴 Critical |
| 6 | Pay off high-interest debt | 🟡 Important |
| 7 | Update estate documents (will, POA, beneficiaries) | 🟡 Important |
| 8 | Test your retirement budget for 6 months while still working | 🟡 Important |
| 9 | Downsize or reduce fixed costs | 🟡 Important |
| 10 | Build a 1-2 year cash buffer | 🟡 Important |
| 11 | Plan for purpose and social connection | 🟢 Important for well-being |
| 12 | Consider part-time or consulting income | 🟢 Optional buffer |
Retirement Income Sources
| Source | Typical Amount | When Available |
|---|---|---|
| Social Security | $20,000-$50,000/year (varies by history) | Age 62 (reduced), 67 (full), 70 (maximum) |
| 401(k) / IRA withdrawals | Based on savings; 4% rule | Age 59½ (penalty-free) |
| Pension (if applicable) | Varies | Per employer plan |
| Part-time work / consulting | $10,000-$40,000/year | Anytime |
| Rental income | Varies | Anytime |
| HSA (for healthcare expenses) | Based on balance | Anytime for medical; age 65 for any purpose |
The Retirement Math
| Expense Category | Pre-Retirement | Estimated in Retirement |
|---|---|---|
| Housing (mortgage or rent) | $1,800 | $1,200 (paid off or downsized) |
| Healthcare | $250 (employer plan) | $600-$1,200 (before Medicare) |
| Food | $600 | $500 |
| Transportation | $500 | $300 |
| Insurance | $200 | $150 |
| Utilities | $250 | $250 |
| Entertainment / travel | $300 | $500 |
| Taxes | Varies | Lower (but not zero) |
| Monthly total | $3,900 | $3,500-$4,100 |
| Annual total | $46,800 | $42,000-$49,200 |
Healthcare Before Medicare (The Gap)
| Age | Coverage Option | Annual Cost (Individual) |
|---|---|---|
| 60-64 | ACA marketplace (with subsidies) | $3,000-$12,000 |
| 60-64 | COBRA (from employer, up to 18 months) | $6,000-$15,000 |
| 60-64 | Spouse’s employer plan | Varies |
| 65+ | Medicare Parts A + B + supplement | $2,400-$6,000 |
| 65+ | Medicare Advantage (Part C) | $0-$3,600 |
The pre-65 healthcare gap is the #1 financial surprise for early retirees.
Tax-Efficient Withdrawal Order
| Order | Source | Tax Treatment |
|---|---|---|
| 1 | Taxable brokerage accounts | Capital gains rates (lowest) |
| 2 | Tax-deferred (Traditional 401k, IRA) | Ordinary income |
| 3 | Tax-free (Roth IRA, Roth 401k) | No tax — let it grow longest |
| 4 | HSA for medical expenses | Tax-free |
This is a general guideline. Your specific situation may benefit from Roth conversions in early retirement years when income is low.
Test-Drive Your Retirement Budget
| Step | Action |
|---|---|
| 1 | Live on your projected retirement budget for 6 months while still working |
| 2 | Include healthcare at full cost (not employer-subsidized) |
| 3 | Track actual spending carefully |
| 4 | Adjust your plan based on reality |
| 5 | If it’s tight, consider working 1-2 more years or reducing expenses |
The Bottom Line
Retirement planning isn’t about a single number — it’s about matching your income sources to your expenses for 25-30+ years, with a plan for healthcare, taxes, inflation, and unexpected costs. The best thing you can do is test-drive your retirement budget while still working and adjust before you’re locked in.
Related: Before You Retire | Financial Checklist Before Retirement | Things to Do 5 Years Before Retirement